Do you put money aside regularly to help cover your tax obligations?
Businesses in Australia that are registered for GST are required to regularly submit Business Activity Statements. This could be monthly, quarterly or annually. (If you are paying a contract bookkeeper to do this, they must be a registered BAS Agent).
If having to come up with money to cover your ATO obligations is causing you stress why don’t you review amounts owing more regularly and put them aside into another account? This idea works equally well for larger businesses or sole-traders and freelancers.
- GST – generate GST report for the past month. Subtract GST paid amount from GST collected amount. This is what you owe the ATO.
- PAYG withholding – generate payroll reports for the previous month to find out how much you withheld from employee pays.
- PAYG instalments & fringe benefits tax – check previous BAS to see what instalment amounts are going to be due with your next BAS.
- Transfer the total amount from steps 1-3 into another bank account.
- Repeat on a regular basis eg monthly.
Not only do you have the money sitting there available to pay your BAS liability when it falls due, but you can also pay your other expenses with confidence knowing that your tax obligations are taken care of. So easier business decisions, less stress and improved cashflow overall.
I have other ways to improve cashflow that you can implement into your small business and will post these soon. In the meantime, you could check out my post from a couple of years ago 14 Cashflow Tips for Small Business and also Have you heard about cashflow forecasting?
Do you put aside money regularly to meet your tax obligations?